Italy fears cost of political battles

Thursday, January 03, 2013 - 02:22

Jan.03 - 2013 doesn't look that bright for Italy, as the country struggles with stagnant growth and as a political battle is heating up. Former Prime Minister Silvio Berlusconi has accused outgoing PM Mario Monti of breaking his word by campaigning for a second term. Joanna Partridge asks whether Italy can afford more political turmoil

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A bracing start to 2013 for a few hardy Italians in Rome.
But even the less brave look set for a rollercoaster year.
Some fear upcoming elections could destabilise the political situation.
The euro zone's third largest economy already has one of the world's lowest average growth levels.
SOUNDBITE: Alba Gentili, University student, saying (Italian):
"Unfortunately I don't think the crisis is over and I don't think much will change in 2013. I just hope it doesn't get any worse."
SOUNDBITE: Benedetta Sturba, Worker, saying (Italian):
"I'm lucky as I have a job, so I can't complain. I manage to get by. But I hear many people saying their money doesn't last until the end of the month and they're in debt."
Mario Monti was appointed head of a technocrat government in late 2011
He was tasked with saving Italy from financial crisis after Silvio Berlusconi quit.
But late last year Berlusconi's party withdrew its support and now Monti must campaign for a second term against an angry Berlusconi.
SOUNDBITE: Silvio Berlusconi, Leader of Italy's centre-right PDL party, saying (Italian):
"He was placed in a position to lead a technocrat government and he promised the President that he wouldn't profit from this role by entering politics. He promised me as outgoing prime minister and he promised the Italian people."
Some of Monti's reforms seem to be working.
Spending cuts and tax rises helped Italy cut its state sector budget deficit from 63.8 to 48.5 billion euros last year.
Jan Randolph is from IHS Global Insight.
SOUNDBITE: Jan Randolph, IHS Global Insight, saying (English):
"Monti has told Italy to take a look at itself, must find new ways of finding competitiveness and growth and come out of its slumber stagnation over the past few years. And you know there are signs that this is positive. You know it's all about loosening up the economy, breaking up these insider business networks, defensive anti-competition, anti-investment, these are the attitudes that prevail in some parts of the Italian economy."
Whoever wins February's election faces an uphill battle to turn the country around.
The crisis in the bond market has subsided.
But other economic indicators have got worse, youth unemployment has risen and the cuts appear to have dragged Rome into a recessionary spiral.

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